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According to Lehman Bros., some 500 million PCs are too old to run Microsoft's Windows XP. Microsoft will no longer offer technical support for Windows versions 3.1, 3.11 and 95 after Tuesday. Windows 98 and Windows NT versions up through NT4.x won't be supported after June 30. In addition, equipment purchased from 1997 to 1999 is fully amortized, meaning the initial costs have been recaptured on the books.
For most of the two years since the Internet bubble burst and knocked the technology industry into its worst slump, everyone from unemployed programmers to disaffected investors has looked hopefully to 2003 for a turnaround.
Now, with the new year about to begin, it looks like a turnaround is indeed on the way -- albeit a relatively modest one, as corporations timidly upgrade their aging computer systems and look for workers to maintain them.
Spending on information technology rises and falls with corporate profits. As the economy softened in 2001, companies delayed modernizing their systems, given that many had spent considerably on upgrades to combat anticipated Y2K problems. IT spending peaked in 2000 at more than $1 trillion, before falling 10 per cent in 2001 and remaining flat in 2002.
But now those upgraded systems are themselves in need of upgrading. Only a quarter of the PCs now in use are powerful enough to run Microsoft Corp.'s Windows XP operating system, which is quickly becoming the standard for desktop and laptop applications.
Happily for the tech industry, that need to update coincides with growing strength in corporate earnings.
"Corporate profitability is the driving force for improvement in IT spending," says Daniel Niles, technology analyst with the investment bank Lehman Bros. "We believe this is beginning to occur, as revenues are increasing sequentially and profitability leverage is kicking in."
At a recent meeting with securities analysts, Hewlett-Packard Co. executives said they expected IT spending in 2003 to grow two per cent to four per cent in 2003, and increase seven per cent to nine per cent annually in the next several years.
PC sales were better than expected in the third quarter and 2002 may show a gain over 2001.
According to Lehman Bros., some 500 million PCs are too old to run Microsoft's Windows XP. Microsoft will no longer offer technical support for Windows versions 3.1, 3.11 and 95 after Tuesday. Windows 98 and Windows NT versions up through NT4.x won't be supported after June 30. In addition, equipment purchased from 1997 to 1999 is fully amortized, meaning the initial costs have been recaptured on the books.
(Copyright Vancouver Sun 2003)